Things in the GCC are officially becoming more expensive in 2018.
Starting on Jan. 1, 2018, the United Arab Emirates will implement a 5 percent value added tax. Fellow GCC countries will have one year to follow the UAE's example, according to UAE Minister of State for Financial Affairs Obaid Humaid Al Tayer.
"Once the framework agreement on implementation of VAT is reached, GCC countries have time from January 1, 2018 to January 1, 2019 to implement VAT," Tayer said, according to Khaleej Times . "A lot of ground work needs to be done before implementing VAT. The private sector will need time to prepare for complying with tax rules. That is the reason we are giving enough time for all."
But, don't freak out too much. The VAT doesn't apply to everything.
Tayer explained that 100 food items, bicycles, health, education and social services would all be exempt from the newly created tax.
Of course, cyclists are breathing a sigh of relief …
Also, the possibility of implementing corporate and income taxes isn't even on the table at this time. However, according to the undersecretary for the UAE's Finance Ministry, the relatively small 5 percent tax could generate as much as 12 billion dirhams ($3.27 billion) in the UAE alone during its first year of implementation.
The decision comes as GCC countries are seeing significantly lower revenues from oil and are facing budget deficits as a result.
Christine Lagarde, managing director of the International Monetary Fund, voiced her support of the move, stressing the importance of raising non-oil revenues. She also highlighted the successful steps the UAE has already taken to greatly diversify its economy.
So, now is the time to buy that sports car you have been eyeing. Do it now before 2018!
But if you have that kind of cash, what's an extra 5 percent anyway?